Crystalline silicon (c-Si) solar photovoltaic (PV) modules will costs less than $1 per watt by Q1 2012, projects IHS iSuppli research. The sought-after milestone could boost installations globally, but will the vertical integration solar company model survive it?
Henning Wicht, PhD, IHS iSuppli
June 17, 2011 — Crystalline silicon (c-Si) solar photovoltaic (PV) modules will costs less than $1 per watt by Q1 2012, projects IHS iSuppli research. $1/W is the most broadly pursued goal of solar photovoltaics promoters. IHS iSuppli believes the benchmark could give a boost to PV installations globally and forestall a market downswing.
An accelerated, rapid decline in pricing came about after Intersolar Europe this month in Germany. Going into Intersolar, spot prices from the top Chinese brands, among the major players in the market, had been running at $1.49 per watt for mainstream c-Si modules. By the time Intersolar closed, prices had fallen to $1.30 per watt. IHS iSuppli states that this could have happened because of the predicted flat or negative growth forecast for 2012. Top-tier module brands lowered prices to gain market share in the face of slowed growth or a market decline, explained Henning Wicht, senior director and principal analyst, photovoltaics, at IHS. Solar wafers have experienced price declines in 2011 as well: wafers were quoted in the $2.30 per-piece range in June, down from $3.50 in March.
|Figure. IHS iSuppli outlook for the cost of silicon + non-silicon content, gross margins and prices from top-tier module players, covering the second quarter for each year from 2011 to 2014.|
While gross margins are projected to range between 10 and 12% this quarter, intense competition will slash margins to 5-9% by Q2 2012, IHS iSuppli research indicates. This margin pressure calls into question the vertically integrated business model popular in the PV industry. Can a vertical operation invest in wafers, cells and modules on the one hand, finance downstream projects on the other, and also continue to run world-class operations at each level?
Certain installations could drop to $2/W, said Mike Sheppard, analyst for photovoltaics and financial services at IHS, which he predicts would be ?an important driver for stimulating demand,? preventing a solar installations dip in 2012.
Though many vertical operations will continue to thrive, the space likely will find increased competition from another breed of player?the so-called specialists that will be able to aggressively invest in just one area, and more important, hold their own against their vertically integrated rivals.
Learn more on IHS iSuppli Photovoltaics Research here.